Tips and tricks for running a successful business, by Scott Fisher
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12:31 AM, 24 August 2017
You as individuals and as business owners and managers are the life blood in your respective communities. Without you the places where we live and play would have no life, no heart. Retail, an 80 billion dollar industry, employing more than 200,000 people is essential to the world we live in.
But business is not easy, most of the working population opt for a wage or a salary but you are all business owners. A successful business is a financially sustainable enterprise that rewards you for your time and the risk that you take.
There are many other business objectives that you aspire to… sustainable, best employer, eco friendly, ethical… all are important but if you are not sustainable then they don’t mean much.
Business owners want: More Sales, Better Margin, and Less Cost. If the cost is more, then the other two become even more important. These three tenets are the markers of a successful business.
Business Basics
My passion is Business Basics because I see a high churn rate in small businesses and have seen good businesses stumble because they have not done the basics well.
So here are my questions that as business owners (newbies or been a retailer for decades) you must know, must action and ultimately be happy with the answers : these will indicate if your business is sustainable. This puts aside the other business essential of a good strategy for now: having a strategy is no use if you are not operationally effective.
You must know your point of difference. Are you the cheapest, do you offer specialty books, are you the most convenient? What is your online strategy?
Here is what you ought to know about your business – these are the basics. Let your profit and loss statement guide you.
Sales
• What is your average sale
• What is your average basket size
• When is your first sale of the day
• When is your last sale of the day
• What product in the shop has the best margin
• What product in the shop has the worst margin
• What add-ons are successful with your customers?
Margin
• How does it compare – benchmark esp big cost items
Pricing – Science and Art
• Strategy, different categories, competition, customer demographic, convenience premium
If you want to make big changes then it is best to start with the big spends. Then you can move on to the small spends.
• stock
• staff
• lease
Stock
• Do you have stock older than 12 months?
• Do you quit slow-moving stock? Take the loss?
• Is your stock room full all year? Only for Xmas trade? Empty the stock room once a year
• Do you know your stock turn? Do you measure it.
• Stock turn = sales/inventory
Staff
• Do you have quality staff?
• What’s your training plan?
• Do you incentivise them?
• Do you thank them?
• Do your staff share your passion?
• Can you leave the store with confidence?
Lease
• Have you considered moving premises
• Have you renegotiated your lease
• Have you considered buying your own premises
Property
• Premises – tidy or tired?
• Merchandise – tidy, changes, fresh or dusty & worn?
• Shop window – same as 3 months ago or change every month?
Others
• Expectation - want to go quick as a Ferrari but have a Corolla
• Are you as passionate about your business today as you were when you first started?
• Exit strategy – can you sell your business as a going concern?
• Are you prepared to reinvest in your business – paint, new fit out, carpet, signage
• Demographic – has it changed, have you changed? Especially for suburban shops
• Big businesses have buyers, merchandisers, marketeers, accountants etc. You are all these and you will likely need help
• Who can help you...Retail NZ, Booksellers NZ, mentors, other bookstores
• Is your working capital enough? – overdraft with fee and 10% or extra loan for 8%?
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Scott Fisher is the CEO of Retail NZ, New Zealand’s largest retail industry group. Scott started his retail career with an after-school job at Para Rubber, and later in life Scott was a co-owner of a toy shop in suburban Wellington, so he knows first-hand the challenges of small business. In his corporate career Scott has loyalty programme experience with many of New Zealand’s largest retailers.
Scott gave these tips as part of the ‘Tips & Tricks for running your business’ panel at the 2017 Booksellers NZ conference.